Producer Price Index Manual: Theory and Practice ... - METAC

Producer Price Index Manual
Table 14.1. Production Account for an Establishment, Institutional Unit, or
Institutional Sector
(1993 SNA items in bold refer to flows in goods and services)
Uses
P.2 Intermediate consumption (purchasers’
prices)
Resources
P.1 Output (basic prices)
B.1 Gross value added (balances the account;
that is, it is the difference between
output [P.1] and intermediate
consumption [P.2])
Of which, memorandum items breaking
down total output for classifying
the market/nonmarket status of the
producer unit:
P.11 Market output
P.12 Output for own final use
P.13 Other nonmarket output
14.20 Accordingly, output Y and imports M in
equations (14.1) and (14.2) are valued at basic
prices, to which are added taxes less subsidies on
products T to arrive at total supply. 7 The components
of total uses are valued at purchasers' prices.
This is clearly interpreted for the final consumption
of households and government. For capital formation
expenditures, the notion of purchasers’ prices
also includes the costs of setting up fixed capital
equipment. For exports, purchasers’ prices include
export taxes net of subsidies, according to the “free
on board” (fob) value at the national frontier. Now
each of the four major goods and services accounts
are discussed in turn.
7 The reader may have noted that transportation, insurance,
and distribution margins have somehow disappeared after
having been introduced. Whether these services are included
with the good or invoiced separately does not affect the total
expenditure on goods and services by the purchaser. For the
economy as a whole, these transactions cancel out, but when
industry activity and product detail are considered, they will
have redistributive effects among goods and services products.
This point is revisited in the discussion of the Supply
and Use Table below.
B.1.3.2 Production
14.21 An institutional unit engaged in production
is said to be an enterprise. By implication, any of
the five types of resident institutional units can be
an enterprise. The production account for enterprises
in the 1993 SNA appears, with minor reordering
of elements, essentially as shown in Table 14.1.
An identical presentation also applies to the establishments
or LKAUs owned by enterprises, and, in
fact, an establishment can be defined operationally
as the smallest unit for which a production account
can be constructed. There are cases in which an establishment
or LKAU is synonymous with, or at
least inseparable from, the institutional unit that
owns it. This is true of single establishment corporations
and of household unincorporated enterprises,
for example. In other cases, an enterprise
may own multiple establishments. The production
account also can be produced for various establishment
and enterprise groupings, including institutional
sectors, but also for establishment industry
activity groups. In the production account and
throughout the 1993 SNA, the transaction codes beginning
with “P.” refer to entries for transactions in
goods and services. The codes beginning with “B.”
refer to so-called “balancing items,” which are defined
residually as the difference between a re-
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